The risk of deflation has been dominating financial news lately, but health care costs for retirees continue to increase rapidly, according to Fidelity Investments.

The company has calculated an annual retiree health care cost estimate since 2002. Over the past seven years, the amount needed for retiree health care costs has jumped $80,000, or 50 percent, to $240,000 in 2009 from $160,000 in 2002.

A 65-year-old couple retiring in 2009 will need about $240,000 to cover medical expenses in retirement even with Medicare insurance coverage, according to Fidelity Investments’ latest health care cost estimate. This figure is a 6.7 percent increase over the 2008 estimate of $225,000.

“American households, already under strain from the difficult economy, are facing another challenge to their financial security in retirement as medical costs continue to rise steadily,” says Brad Kimler, executive vice president of Fidelity’s Consulting Services business, which calculated the retiree health care cost estimate. “With employee-sponsored retiree health-care coverage on the decline nationwide, it is imperative that today’s workers begin to set aside money themselves for medical expenses in retirement as part of their overall retirement strategy.”

As in years past, the Fidelity 2009 retiree health care cost estimate assumes individuals do not have employer-provided retiree health care coverage, but do qualify for the federal government’s insurance program Medicare. The Fidelity estimate takes into account cost-sharing provisions (such as deductibles and coinsurance) associated with Medicare Part A and Part B (inpatient and outpatient medical insurance).

It also considers Medicare Part D (prescription drug coverage) premiums and out-of-pocket costs, as well as certain services excluded by Medicare. The estimate does not include other health-related expenses, such as over-the-counter medications, most dental services and long-term care.

The jump in the retiree health care cost estimate from 2008 to 2009 can be attributed to a number of factors including higher costs (e.g. for doctor’s visits, diagnostic tests), increased expenses associated with new technology and overall inflation.

Fidelity offers guidance to help individuals budget for health care expenses in retirement at the Retirement Resource Center at Fidelity.com. Employees who have a workplace savings plan with Fidelity also can go to their NetBenefits website to access a retirement health-care calculator. The tool can project future health-care costs after factoring in a person’s age, location, retirement date and number of family members.

For employers who offer the Fidelity health-care savings account or HSA, there is an enhanced version of the calculator provided by WebMD, which also incorporates a person’s detailed health status and allows employees to project their future HSA accumulation.